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State of the economy probability RA RB Boom 0.30 16 40 Normal 0.50 11 10 Recession 0.20 6 -20 a) Expected return b) variance c)
State of the economy probability RA RB
Boom 0.30 16 40
Normal 0.50 11 10
Recession 0.20 6 -20
a) Expected return
b) variance
c) standard deviation
d) Which asset would you choose?
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